SECURITIES AND EXCHANGE COMMISSION FORM 1-K Filing Date: 2017-05-01 | Period of Report: 2016-12-31 SEC Accession No. 0001214659-17-002855 (HTML Version on secdatabase.com) FILER Elio Motors, Inc. Mailing Address Business Address 2942 N 24TH ST 2942 N 24TH ST CIK:1531266| IRS No.: 271288581 | State of Incorp.:AZ | Fiscal Year End: 1231 SUITE 114-700 SUITE 114-700 Type: 1-K | Act: 33 | File No.: 24R-00009 | Film No.: 17800289 PHOENIX AZ 85016 PHOENIX AZ 85016 SIC: 3711 Motor vehicles & passenger car bodies (602) 424-7472 Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document PART II INFORMATION TO BE INCLUDED IN REPORT Item 1. Business Corporate Background and General Overview Motivated by the belief that America can engineer and build a high quality, reliable, safe, eco-friendly and affordable vehicle for everyone, engineering veteran Paul Elio founded Elio Motors, Inc. as an Arizona corporation in October 2009. Today, Elio Motors is an American vehicle design and manufacturing company committed to providing safe, affordable and efficient vehicles. Leveraging existing technology, Elio Motors has designed a revolutionary front engine, front-wheel drive, two-seat, gasoline-powered vehicle, with two wheels in the front and one wheel in the rear – the Elio. Its unique design makes the vehicle more aerodynamic with significantly higher gas mileage than standard vehicles. Elio Motors hopes to make a game-changing impact beyond sales; creating thousands of jobs, reducing dependence on foreign oil, reducing emissions, and favorably affecting the trade deficit by reducing foreign oil imports, exporting vehicles, and providing a significant return for investors. The Elio Target vehicle specifications for the Elio are as follows: The Elio – Target Vehicle Specifications Overview Body and chassis Chassis/Body: Unibody & panel Layout: Front engine, front-wheel drive, 3-wheeled, open front wheel Powertrain Engine: 0.9 liter 3 cylinder, 55 horsepower Transmission: 5 speed manual or automatic manual transmission (AMT) Dimensions Wheelbase: 110 inches Length: 160.5 inches Track Width: 66.8 inches Height: 54.2 inches Target Curb Weight: 1350 pounds Trunk Space: 27 inches x 14 inches x 10 inches (2.2 cubic feet) Performance 0-60 mph: 10.8 seconds Top Speed: 100 miles per hour+ Fuel Economy: 84 miles per gallon EPA highway; 49 miles per gallon EPA city Range: Up to 672 miles Other Fuel: Unleaded gasoline Fuel Capacity: 8 gallons The Elio’s expected mileage range of 672 miles exceeds that of electric vehicles (100 to 300 miles) and that of most other vehicles of its size (400 to 500 miles). Configured in a three-wheel format, it is conceived with tandem seating for two passengers to travel in a front-to-back layout. With a targeted retail price of $7,4501 per vehicle, we believe that the Elio provides the efficiency and environmental friendly benefits without the price premium, driving range anxiety or safety risks of electric or hybrid vehicles. Based on the current prototype and sources for components, the bill-of-materials (BOM) cost has been developed, which is the largest component of the retail price for the Elio vehicle. At present, the current BOM would require a sales price of $7,526. However, during the prototype phase of any automotive vehicle program it is quite customary to have a gap to a design BOM cost target. The cost targets for the Elio have been set based on the management team’s collective past experience in sourcing hundreds of automotive components. Actual BOM costs can vary up or down during vehicle development as engineering changes are made and validated through testing. Through continuous product refinement during vehicle development, supplier negotiation closer to production and scale economies post-production, this cost Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document gap is typically bridged. While design-decision driven costs are within our control, the commodity price fluctuations driven by energy prices are beyond our control. 1 For a “base” vehicle without optional accessories, destination/delivery charges, taxes, title and registration. 1 Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The tandem seating design is a key component to the achievement of the Elio’s fuel efficiency; it reduces vehicle body2 width by half that of the typical side-by-side seated two to four passenger compact car (68.8 inches wide on average3), minimizing the wind drag on the vehicle by a corresponding one half. Drivers will benefit from the vehicle’s three-wheel, two-passenger format, not only for additional practical reasons, but also as it permits them to utilize the High Occupancy Vehicle (HOV) or carpool lanes on roads and highways. By employing the three-wheel design, the vehicle qualifies as a motorcycle4, lowering the degree of federal and state compliance requirements, as compared to vehicles with four wheels or more, and drastically reduces the cost of development and launch of the vehicle. Although the vehicle is technically classified as a motorcycle, we have designed the Elio to meet the more stringent safety standards of cars. Features and Options. The vehicle is designed to have the same standard comfort and functional features customers have come to expect in modern automobiles: air conditioning, heat, AM/FM stereo, power windows and door lock, airbags, auxiliary port(s), anti- lock brakes, and traction control. An automatic manual transmission (AMT) is an option. Other optional luxury features will be available as well, such as leather seats, power seats and various exterior body aesthetic add-ons. It will also have newer generation options, such as rear view/backup camera, remote engine ignition, GPS-mapping, navigation, web radio and custom body wrapping. Customers will be able to select from seven different body color options: Rocket Silver, Sour Apple, Creamsicle, Red Hot, True Blue, Licorice and Marshmallow. Vehicle Development and Existing Technologies Used. While the Elio is unique from what exists in the current market, many of its planned components and technologies are already in use and accessible in today’s automotive production market, thus reducing the need, costs and execution risks of vehicle development. Many components utilized in the construction of the vehicle’s interior, chassis, powertrain and body, are either available off-the-shelf or can be modified from off-the-shelf items for use in production of the vehicle. “Off-the-shelf” means the components are in current production in other automaker vehicles and the component suppliers either own the production tooling and/or designs to these components or have the permission to sell these components to Elio Motors. The benefits of using off-the-shelf components are proven, durable performance and lowered costs due to economies of scale. We have already established letters of intent with industry-leading suppliers to provide the Elio’s systems and components, such as Linamar Corporation for the engine, Aisin for the transmission, and Hyundai Dymos for the seats. Automakers generally outsource a significant portion of the vehicle components to third-party suppliers. In fact, according to Oliver Wyman, in order to meet the evolving consumer demands and to remain competitive, suppliers’ share of the value creation in vehicle development was 77.3% in 2012 and is projected to increase to 81.1% by 2025.5 This means that Elio Motors is not alone in this regard. In addition, automakers single source components for a given vehicle platform, but use multiple suppliers for their portfolio of vehicle platforms in order to have pricing leverage over suppliers. Although we are single sourcing any given automotive component, our purchasing group has a reserve of two or three capable suppliers to protect against pricing or other supply risks. In fact, we have successfully switched suppliers for a few components already. 2 Based on the width of the vehicle’s body from left side panel to right side panel, and distinct from track width. 3 Source: Edmunds.com as of 2007 (http://usatoday30.usatoday.com/money/autos/2007-07-15-little-big-cars_N.htm) 4 The National Highway Traffic Safety Administration (NHTSA) defines a motorcycle as “a motor vehicle with motive power having a seat or saddle for the use of the rider and designed to travel on not more than three wheels in contact with the ground.” 5 Source: Oliver Wyman Automotive Manager 2014 Articles (http://www.oliverwyman.com/content/dam/oliver-wyman/global/ en/2014/jul/17-19_AM_2014_Boosting%20Engineering%20Performance.pdf) 2 Copyright © 2017 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Unibody and Body Panel Design. The Elio has gone through numerous changes and the design has been adapted to a unibody design. The unibody provides a reduction in weight, improved manufacturability at high volume and improved safety by elimination of fumes during the MIG (metal inert gas) welding process. Unibody also helps with the fit and finish of the vehicle by providing tighter tolerances. This change also allows for the use of steel panels for the outer body. The combination of unibody design and steel outer panels will improved the fit and finish and provide higher volume level than composite panels. With the new metals for the outer body, we are able to lower the piece price of the components, lower tooling costs, improve cycle time, design to tighter tolerances, improve crashworthiness and have a better overall product. Also, the change reduces the use of adhesives in the plant, which are volatile and a safety concern. Engine/Powertrain. Perhaps the most critical aspect to the vehicle’s performance is the engine. The Elio engine is an inline 0.9 liter combustible three-cylinder engine, which has been custom-developed for the Elio application.